New Bottom Line Volume 4.14 – Who Knows What Business You're Really In? The Dump Heap Knows.

July 19, 1995

How much do we waste? Discussion of this subject is typically a conversation about tons, not percentages, amounts rather than ratios. It’s part of the disease of modern innumeracy: we have no shortage of data, but meaning emerges only when data is seen in context, placed in a trend, understood as part of a pattern.

Consider throughput. What percent of the physical “throughput” of the US economy–or your company–would you say becomes product? I’ve started to informally survey my lecture audiences about this question. Most people guess 80-90% product, and 10-20% “non-product output” (in Bruce Cranford’s clever phrase). The more environmentally sophisticated–or those who suspect a trick question–venture that it might be 50/50. In fact, according to Robert Ayres (writing in a 1989 National Academy of Engineering report), “Ninety-four percent of the material used in industrial production thrown away before the product is made.”

It’s a shocking figure for both the micro-economy of the firm and the macro-economy of the society. How many CEOs would imagine, when asked that familiar consultant question “what business are you in?” that potentially nine-tenths of their physical production was generating no revenue? (For that matter, how many consultants would imagine that?) In my experience, executives who do face that question never think of their business the same again. In fact, there now exists a Zero Emissions Research Institute (connected with the United Nations University in Tokyo) where a number of global corporations are seriously exploring the possibility–or at least the design challenge–of the zero waste company.

Ayres’ throughput estimate is also a shocking figure when you consider that municipal solid waste (MSW), the focus of so many people’s notion of our “waste problem,” represents less than 1.5% of the total US “waste” stream–and only half of that is residential waste. With that perspective, individual choices takes on an entirely new dimension..

The point is not that the direct consequence of individual choice–whether of residential or business end users–are minor, just a drop in the bucket of the total national waste stream. Rather it is that every choice we make has far larger impact than what we see before us in our homes or companies. Each choice represents the “embodied” environmental impact of the entire life cycle of that choice, from primary extraction of its raw materials, through multiple stages of processing, to use and ultimate disposition. Each pound of product–and each pound of waste–represents many pounds of other products, raw materials, and wastes that gave their lives so your toaster could be.

Ultimately, much of the trail leads back to four industries–pulp & paper, petroleum, chemicals and primary metals–that account for 85% (by weight) of the waste generated in the US, 80% of industrial energy use, more than 70% of toxic waste according to Joe Romm. There is hardly a business or home that isn’t ultimately a customer of these four. Each of our purchasing decisions is a telegram back to these four industries, an order for another contribution to that waste stream–or a call for the “ecological re-engineering” of these industries.

To a certain extent, this is a technical task–replacing technologies, transforming processes–but it is also something much more challenging–transforming the fundamental missions and identities of these industries. For example,

Is the pulp and paper industry in the business of turning trees into paper products? Or in the business of managing forest ecosystems and society’s fiber recycling systems.

Is the petroleum industry in the business of extracting and refining ancient biofuels from the earth’s crust, or producing and refining current biofuels from the earth’s surface? (Which would put them in an industry closely related to the future of forestry.)

Will the chemical industry base its wizardry of synthesis on the hydrocarbons of the petroleum economy, or on what David Morris and Neil Seldman call the “carbohydrate economy” of biofuels and bioplastics? Is that wizardry best served generating fueling a throwaway economy, or creating durable products?

Is the metals industry–with its vast technical knowledge for refining metals–in the mining business, with its low grade ores? or the recycling business, mining the high grade “ores” already circulating in the human economy?

What if your company is not in one of those four industries? What if you’re not terribly concerned with the life cycle impact of your companies purchases and actions? You might still consider this: a company with 10% productive throughput that can find a way to convert just one-tenth of its waste into useful product can nearly double its productive output without consuming additional resources. Take that to your next strategy meeting.

(c) 1995 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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